Ark. Code Ann. » Title 15 Chapter 74
Arkansas Code Annotated

Ark. Code Ann. § 15-74-601 (2020)

Time limits governing oil and gas payments — Definition

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  1. The proceeds derived from the sale of oil or gas production from any oil or gas well shall be paid to persons legally entitled thereto, commencing no later than six (6) months after the date of first sale and thereafter no later than sixty (60) days after the end of the calendar month within which subsequent production is sold or as provided for under subdivision (b)(2) of this section.
    1. The payment of proceeds under subsection (a) of this section is to be made to persons entitled thereto by the first purchasers of the production.
    2. The payment may be made annually for the aggregate of up to twelve (12) months of accumulation of proceeds if the aggregate amount owed is at least ten dollars ($10.00), but less than one hundred fifty dollars ($150), provided, upon written request by the royalty owner, the payment shall be made when the aggregate amount exceeds fifty dollars ($50.00). Accumulated amounts of less than ten dollars ($10.00) may be held but shall be paid when production ceases or by the payor of the payment upon relinquishing responsibility.
  3. As used in this subchapter, “first purchaser” means the first commercial purchaser after completion of the well and shall not include purchasers of oil or gas during initial testing prior to completion.
  4. Any delay in determining the persons legally entitled to an interest in the proceeds from production caused by unmarketable title to the interest shall not affect payments to persons whose title is marketable.
  5. When payment has not been made within the time limits specified in this subchapter, the first purchaser shall pay interest to those legally entitled to the withheld proceeds commencing on the payment due date at the rate of twelve percent (12%) per annum on the nonpaid amounts unless a different rate of interest is specified in a written agreement between the payor and the payee.
  6. The first purchaser shall be exempt from the provisions of this subchapter, and the owner of the right to drill and to produce under an oil and gas lease or force pooling order shall be substituted for the first purchaser therein when the owner and purchaser have entered into arrangements in which the proceeds are paid by the purchaser to the owner, who assumes the responsibility of paying the proceeds to persons legally entitled thereto.
  7. Moneys paid by the payor under this section may be paid by either check or any form of electronic funds transferred to the persons legally entitled to the moneys under § 15-72-305.

History. Acts 1981, No. 269, § 1; 1983, No. 448, § 1; A.S.A. 1947, § 53-525; Acts 2003, No. 276, § 1; 2013, No. 1062, §§ 4, 5.

Amendments. The 2013 amendment added “or as provided for under subdivision (b)(2) of this section” in (a); inserted “of proceeds under subsection (a) of this section” in (b)(1), rewrote (b)(2); and added (g).

Cross References. Partition, execution of lease, and evidence, § 15-73-407.

Case Notes

Penalty.

Where company made timely payments on leases for oil, gas, and brine, but mistakenly made the payments to the wrong person, trial court correctly refused to award penalty and attorney's fee to the prevailing party legally entitled to the payments. Atlanta Exploration, Inc. v. Ethyl Corp., 301 Ark. 331, 784 S.W.2d 150 (1990).

Cited: SEECO, Inc. v. Hales, 330 Ark. 402, 954 S.W.2d 234 (1997).

Notes of Decisions
Cited in 6 cases (1 in the last 5 years), 1990–2026 · leading case: Seeco, Inc. v. Hales, 954 S.W.2d 234 (Ark. 1997).
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Seeco, Inc. v. Hales, 954 S.W.2d 234 (Ark. 1997). · cites it 4× “The royalty owners seek compensatory damages in excess of $58,450,000 and punitive damages against appellants, jointly and severally, on the legal theories of: (1) fraud and constructive fraud; (2) breach of the oil and gas leases; (3) breach of the duty to market the gas…”
Atlanta Expl., Inc. v. Ethyl Corp., 784 S.W.2d 150 (Ark. 1990). · cites it 6× “Ferguson III (Ferguson III), and Bettye Perry (Perry), contend the trial court erred (1) in holding Ferguson III’s and Perry’s ownership interests were effectively integrated in a brine production unit established by appellee, Ethyl Corporation (Ethyl), in 1982, (2) in finding…”
Dorchester Minerals, LP v. Chesapeake Expl., LLC, 215 F. Supp. 3d 756 (E.D. Ark. 2015). · cites it 9× “Ark. Code Ann. § 15-74-601 . Dorchester argues that § 15-74-601(e) does not apply here because § 15-74-601 deals with payments of proceeds by the “first purchaser,” which means “the first commercial purchaser after completion of the well .”
Shale Royalty LLC v. MMGJ Arkansas Upstream LLC, No. 4:18-cv-00621 (E.D. Ark. July 23, 2020). · cites it 9× “The first statute, Ark. Code Ann. § 15-74-601 , provides: The proceeds from the sale of oil or gas production .”
Turner v. XTO Energy, Inc., No. 2:18-cv-02171 (W.D. Ark. Aug. 6, 2019). · cites it 2× “Ark. Code Ann. § 15-74-601 – 604 Mr. Turner also alleges that XTO’s failure to pay him from the proceeds of the gas produced from the Viola formation is a violation of Arkansas Code Annotated § 15-74-601-604.”
Stroud Prod., LLC v. DK Trading & Supply, LLC, No. 4:25-cv-03085 (S.D. Tex. Feb. 24, 2026). · cites it 2× “June 17, 2019) (holding that a plaintiff has failed to state a breach of contract claim when it “has not alleged any actual damages resulting from any breach”’); Ark. Code § 15-74-601 (creating a statutory right to receive proceeds derived from the sale of oil or gas production…”
Ark. Code Ann. § 15-74-601(e): 2 cases
Dorchester Minerals, LP v. Chesapeake Expl., LLC, 215 F. Supp. 3d 756 (E.D. Ark. 2015). “Ark. Code Ann. § 15-74-601 . Dorchester argues that § 15-74-601(e) does not apply here because § 15-74-601 deals with payments of proceeds by the “first purchaser,” which means “the first commercial purchaser after completion of the well .”
Stroud Prod., LLC v. DK Trading & Supply, LLC, No. 4:25-cv-03085 (S.D. Tex. Feb. 24, 2026). “June 17, 2019) (holding that a plaintiff has failed to state a breach of contract claim when it “has not alleged any actual damages resulting from any breach”’); Ark. Code § 15-74-601 (creating a statutory right to receive proceeds derived from the sale of oil or gas production…”
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